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| The '''Incremental Capital-Output Ratio''' (ICOR), is the ratio of [[investment]] to [[wiktionary:growth|growth]] which is equal to 1 divided by the [[marginal product of capital]]. The higher the ICOR, the lower the [[productivity]] of [[Capital (economics)|capital]]. The ICOR can be thought of as a measure of the [[inefficiency]] with which capital is used. In most countries the ICOR is in the neighborhood of 3. It is a topic discussed in [[Economic growth]].
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| <center><math>\text{incremental capital output ratio} = \frac{\Delta K}{\Delta Y} = \frac{\frac{\Delta K}{Y}}{\frac{\Delta Y}{Y}}= \frac{\frac{I}{Y}}{\frac{\Delta Y}{Y}}
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| </math></center>
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| K: capital stock<br>
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| Y: [[Output (economics)|output]] ([[gross domestic product|GDP]])<br>
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| I: net [[investment]]
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| According to this formula the incremental capital output ratio can be computed by dividing the investment share in GDP by the rate of growth of GDP.
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| ==ICOR, world, and determining variables==
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| <gallery>
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| File:IQuoteWeltEngl.PNG|Investment share
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| File:WeltBIPWorldgroupOECDengl.PNG|Rate of GDP growth
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| File:IcorWorld.PNG|The [[Multiplicative inverse|reciprocal]] of ICOR
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| </gallery>
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| == Further reading ==
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| * Reinhart, Carmen M. "Comment" on Giancarlo Corsetti, Paolo Pesenti, and [[Nouriel Roubini]]: "Fundamental Determinants of the Asian Crisis: The Role of Financial Fragility and External Imbalances", in Takatoshi Ito and Anne Krueger, eds. ''Regional and Global Capital Flows: Macroeconomic Causes and Consequences'' (Chicago: University of Chicago Press for the NBER, 2001), [http://books.google.com/books?id=weQa0puIU6IC&pg=PA42#v=twopage&q&f=false 42–45]. ISBN 9780226386768. {{oclc|45314551}}.
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| == External links ==
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| * [http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/EXTDECSTAMAN/0,,contentMDK:20878918~isCURL:Y~menuPK:2648303~pagePK:64168445~piPK:64168309~theSitePK:2077967,00.html Incremental Capital-Output Ratio (ICOR)]—Statistical Manual, [[World Bank]]
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| {{DEFAULTSORT:Incremental Capital-Output Ratio}}
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| [[Category:Investment]]
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| [[Category:Financial ratios]]
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| [[Category:Capital (economics)]]
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| {{Econ-stub}}
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Nice to meet you, my title is Refugia. Hiring is her working day job now and she will not alter it anytime soon. His family life in South Dakota but his spouse desires them to transfer. Doing ceramics is what her family and her appreciate.
My website; bogangsa.com